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TMI Blog2014 (12) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... claim deductions under Section 80HH and 80I of the I.T. Act in respect of the interest income of Rs. 33,91,668/earned by the appellant and in not permitting adjustment of interest debited to Profit and Loss Account amounting to Rs. 44,72,227/-?" Whereas, in Tax Appeal No.29/2001, the following question of law was formulated while admitting the appeal on 20.06.2001; "Whether the Appellate Tribunal is right in law and on facts in holding that though the interest income from bank, fixed deposits and interest from IDBI cannot attract deduction under section 80I, directing to adjust the same in interest expenses?" 2. Briefly stated, the facts are that the assessee is a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitting adjustment of interest debited to the Profit and Loss Account amounting to Rs. 44,72,227/-. 4. Insofar as the first part of the question of law is concerned, the same is already concluded by a decision rendered by the coordinate Bench of this Court in Tax Appeal No.810/2013 decided on 27.01.2014. For ready reference, the findings in the said decision is reproduced hereunder; "Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal (the Tribunal for short) dated 28.2.2013 raising following questions for our consideration: 1. Whether the Appellate Tribunal is right in law and on facts in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business profit only for the purpose of allowing deductions under section 80HHC of the Act for netting purpose without considering the facts that such expenses were incurred from the business income only and not for earning incomes and hence liable to be excluded? Insofar as question No.1 is concerned, the same has two elements. First part pertains to disallowance of discount of Rs. 29.02 lacs (rounded off) for the prupose of calculation of deduction under section 80I and 80HH of the Income Tax Act, 1961 (the Act for short). Second part has reference to transport income of Rs. 6.22 lacs (rounded off) for similar benefits. From the record it emerges that during the previous year relevant to assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r earning such income which should be so excluded. Such a question in the context of deduction under section 80HHC came up for consideration before the Supreme Court in the case of ACG Associated Capsules Pvt. Ltd v. CIT, 343 ITR 89 (SC). The Supreme Court held that for the purpose section 80HHC of the Act, it is not the entire amount received by the assessee on sale of DEPB credit, but the sale value of less the face value of the DEPB that will represent profit on transfer of DEPB credit by the assessee. Heavy reliance was placed in the case of Topman Exports v. CIT, 342 ITR 49 (SC). Extending such logic, it was further held that even other amounts, such as, interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction under section 80HHC of the Act. Learned counsel for the Revenue vehemently contended that the ratio of the decision in the case of ACG Associated Capsules Pvt. Ltd (supra) cannot be applied to a situation where the exclusion from the claim of deduction relates to section 80HH or section 80I of the Act. He strenuously urged that the language used in both the sets of provisions are different. Section 80HHC is also vitally different and that therefore the concept of netting may not be automatically applied to deduction under section 80HH and 80I of the Act. He submitted that number of tax appeals have been admitted by this Court on this issue and this appeal may also be likewise admitted. He drew our attention to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presents vastly different scheme of deduction and also provides for complex formula for deriving for the eligible profit for deduciton under different situations depending on whether the exporter is also engaged in the local business or not. However, this distinction would not be material insofar as central question of exclusion of certain profit from the activity which is not eligible for deduction under section 80HH and 80I are concerned. The logic being when the profit is being excluded form the claim of deduction, not the gross profit but the net thereof, that is the gross profit minus the expenditure incurred for earning such profit should be excluded. That is precisely how this Court in the case of Rajoo Engi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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